From Washington to Texas, Biodiesel Makers Sitting Idle

By Angel Gonzalez

Imperium Renewables’ dream of profiting from peddling biodiesel while doing its part to save the planet has turned out to be just that: a dream. The two-year old biodiesel facility that was meant to be the cornerstone of the Seattle company’s renewable-energy empire hasn’t produced a drop of fuel since February. And it’s not the only one sitting idle.

Associated Press

Imperium Renewables, in happier times.

The 100 million-gallon-a-year plant – once the largest such facility in the U.S. – located in an isolated logging town on Washington’s coast now serves as a storage depot for biodiesel – and a symbol of America’s stalled biofuels industry.

From the beginning it was a tall order for biodiesel makers to turn a penny. Even though petroleum prices skyrocketed last year, providing the rationale for a renewable alternative to diesel, the cost of agricultural feedstocks needed to make biodiesel also went through the roof, eating up profit margins.

But Imperium chief executive John Plaza also places the blame on the U.S. politicians’ failure to create a market for the product. Ethanol enjoys a well-defined federal mandate, but the administration has been slow at enacting rules that would compel fuel blenders to take in more of the fuel.

“We invested in building these facilities based on the efforts and legislation put forward by the government,” he says. Mr. Plaza’s comments underscore how the first wave of biodiesel producers – many of whom took on substantial debt to build commercial-scale facilities – anticipated a huge upturn in demand that never materialized.

Biodiesel has always had its fans – in part because it is a true “drop-in” fuel that can be used in existing diesel engines. But it has also had many detractors. Many alternative energy experts doubt the ability of first-generation biofuels – those made out of traditional crops and foodstuffs – to make a dent on global oil consumption. It would be impossible to grow enough crops, they contend, to feed all of the world’s cars and airplanes without turning whole continents into farms.

On Tuesday, another iconic producer, GreenHunter Energy said it was mulling putting its Houston plant – which last year took over the Imperium plant’s role as America’s biggest – for sale. It has also been idle since February.

But biodiesel producers still hope that rule makers in Washington and the state capitals will enforce a game-changing mandate for the fuel in the near future. But if it goes through, will it be too late for the pioneers?

Comments (5 of 8)

such solvent can be use in old engines to move filters and injector. this can also oil crops like as canola with this i think you shouldnt clear EPA's carbon hurdle.

4:34 pm July 24, 2009

Eric wrote :

Biodesiel has two big dings. It is such a good solvent that when dropped into older engines it moves gums and scale into filters and injectors, stalling the engine. The other ding is that biodesiel from oil seed crops such as soy and canola do not clear EPA's carbon reduction hurdle, so biodesiel lacks mandated usage reserved for celluosic and other advanced biofuels.

On subsidies; the oil and gas E&P and refining industries in the US receive tremendous subsidies in the form of US military intervention in the middle east. If we were to close military bases in the region and yank the 6th fleet from the Persian Gulf we'd be right back in the '70s with oil embargoes and $250/BBL oil virtually overnight. Our military presence in the region serves no other purpose and is clearly a subsidy.

Forget subsidies and biodiesel; focus on truly advanced biofuels. There are two commercial-scale plants capable of producing them going up now in Georgia and Florida. The products from these plants are EPA certified and their use in gasoline manufacture is mandated. Subsidized, yes, with payout only achieved through reduction or elimination of all US military presence in the middle east save Israel, our only true ally in the region. Once we're out of the middle east, there will be no need to further subsidize renewable fuels. Also we must drill in the US with minimal restrictions, using good environmental stewardship, and regain control of our energy future.

10:17 am June 26, 2009

Steve Reeves-Seattle, WA wrote :

With regards to Bio-Diesel. The “Free Market has spoken,” and that’s the way technologies should be. Subsides, only foster Boondoggle pilot projects which I assume this is. By far, Gas to Liquid low temperature processing of natural gas is far cheaper, far more readily transportable then biodiesel. Unfortunately we have big dreamers who are not thinking through the process using standard systems engineering and analysis. As a yachter, I prefer regular diesel because of the fact biodiesel tends to deteriorate internal O-rings and gaskets quicker causing significant maintenance to high priced diesel engines.

1:18 am June 26, 2009

Robert wrote :

I think what Mr. Plaza is getting at is the failure of government to play its proper role. Biodiesel was given a $1 per gallon tax credit for the producer in 2004 as part of the America Job Creation Act. Since then the credit has been extended twice, now set to expire at the end of this year. No doubt, it will be extended again. Many producers built plants and business models that would only be profitable with the tax credit in place. Tax credits like this always distort the natural mechanisms of supply and demand, and ultimately investment. Now that the government distorted supply, next they moved to demand.

Through the Renewable Fuel Standard passed in 2005, biodiesel or other biomass based diesels are supposed to be a minimum of 500 million gallons by this year reaching 1 billion gallons by 2012. To put that into perspective, diesel use in the United States is approximately 55 billion gallons a year. So at most, we could see all diesel in the US become about 2% biodiesel. At this level, and up to 5%, arguably it is a "drop-in" fuel requiring no engine or infrastructure modifications. A billion gallons? Big deal. Just in this article, we see reference to two producers that would represent 20% of that capacity. We don't need an act of Congress and the subsequent EPA rules for that. Given the state of the world oil situation, the market would have given a demand signal on its own. Now, no auto or truck maker has any incentive to support warranties beyond 5% biodiesel. And believe me, they are not.

Recent introductions to the diesel passenger car market from BMW, Mercedes, Volkswagen, and Audi represent exciting innovations in efficiency. Many of these models boast 40mpg or more while meeting stringent emissions standards. But the innovative design actually precludes use of biodiesel beyond 5%. Not only will you void your warranty, if you are not extremely careful, you will void your engine. This is retrograde technologically because diesel engines prior to this latest generation can burn 100% biodiesel with at most an inexpensive upgrade of the fuel lines from natural to synthetic rubber. I would have thought their whole value proposition for the new models would have been "Biodiesel Ready". Not to be.

I don't mind government trying to help a nascent and potentially important technology. But it should stick to what it does best. These are things like supporting R&D, defining clear standards for producers and sellers, and making sure the impact on infrastructure is understood should an industry like this take off. With the government being such a direct player on both the supply and demand sides of this market, I can only imagine that there will be more disappointments like the one we see at Imperium.

4:03 pm June 25, 2009

Tim wrote :

Its frustrating that our government doesn't take seriously the biofuel industry, its made promises that its not taking action to keep as it relates to domestic biofuel production. There is a local plant by my home in Seneca IL that is now bankrupt because of the lack of govt action to support this industry.

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